Unfair Bank Charges: He was charged a $35.00 fee twice over a $4.00 overdraft. A commenter asks “What can I do?” when the bank purposely delays posting fees paid.

JANUARY, 2010 UPDATE

I overdrew my acct by $4.00. The very next day I deposited 50.00 to cover the overdraft and no fees were posted to my acct yet. They waited until my acct had $3.21 left in it, then charged me a 10.00 overdraft fee, which put my acct in negative again. Now I get hit with a 35.00 fee twice. Then an extended fee because I didn’t pay their 80.00$ within 2 days. Unfortunately I refuse to pay 115.00 in overdraft fees for a 7.00 overdraft. This doesn’t even seem legal to me. Is there anything I can do. I am a single dad with a paycheck to paycheck job and I need this acct. What can I do?

I sent the question to Rights Radio financial guru Joe Stallard. He suggests:

I would suggest that he call customer service at the bank. Use an approach along the lines of “I don’t understand what’s going on…can you help me?” No confrontation. No arguing. No outrage at what the bank has done. That won’t accomplish anything – the “can you help me” approach almost always works. It allows the bank (the customer service agent) to be the hero and do a good deed. Most of the customer service reps have the authority to refund the overdraft charges and the banks are not looking to alienate too many customers.

Yes, the bank caused the problem. Yes, the bank held off on crediting the deposit in a timely fashion (waiting for further overdrafts to occur). It’s a common tactic, and it’s flat out wrong. Nothing anyone can do about it other than trying the above approach – I’ve seen it work time after time. Getting angry and “expressing” your outrage usually won’t get your money back. Chalk it up as a lesson learned the hard way (what…you mean the bank isn’t my friend after all?).

Some of the bigger banks don’t do this. Their technology is up-to-date and deposits are credited in “real time” – right when they’re made. After he tries the above, if he gets the fees (or part of the fees) credited back, find a bank that operates in real-time and move the account. ~ Joe Stallard

Change the Law to Cap the Overdraft Fees Banks Can Charge? A Commenter Asks:

Is there a way to get a law passed that will have a cap on the amount a bank can charge for service fees. They should have the right to charge only up to the face amount of the transaction or double it for transactions under 10.00 not a 35.00 fee for a small transaction.. THAT SHOULD BE ILLEGAL. Why can’t someone pass this law asap. I was charged 175.00 for 5 transactions that were all near 1.00. I also made a deposit the same night to cover them but my deposit didn’t get posted till the next day. That way the bank had the opportunity to charge me 175.00 for 6.00 worth of transactions. Can someone please help and explain this to me.

The answer to the inquiry below is yes, in theory but probably not in practice. The desired law would have to be enacted by Congress because it often involves interstate commerce. The banking industry has a strong lobby and would fight this added regulation for several reasons.

First, it would oppose any additional regulation as a matter of principle. Second, it would oppose such a law as depressing its profits at a time when profits are desperately needed. Third, it would oppose any law with absolute numerical cap since costs change over time. The proposal new law would have to set the cap in relative terms. Something along the following lines might work in theory: no bank may charge a penalty or late fee in excess of the face value of the transaction. However, that would open the door to a wide range of fees for the same “offense.” Then while the fee for $1 late check payment would be no more than $1 but it could rise to $1,000 for a $1,000 check and that’s clearly far in excess of the cost of processing such a check.

Fourth, it would oppose a cap of the sort imposed as discriminating against the majority of its customers. A bank’s cost of handling such transactions doesn’t change much if at all with the size of the transaction so a relative cap would unfairly/unjustly penalize people making larger transactions.

The inquirer could write to her/his senators and congressional representatives for further suggestions. A polite response will appear in due course. That response probably will offer a series of reasons for not going further. Those excuses may include the items mentioned above in addition to higher priority commitments. It almost certainly won’t mention that historically there’s only about 1 chance in a million of any particular proposed legislation being passed and then one has to deal with the problems of funding its implementation and enforcement. Nor will it mention the fact that if a politician proposed such legislation s/he is likely to sacrifice it in committee for something s/he deems more important to her/his career. ~ Dr. David Goldenberg.